BRET A. STONE, ET AL. V. LUIS IBARRA, ET AL
BRET A. STONE, ET AL. V. LUIS IBARRA, ET AL
Case Number
23CV05595
Case Type
Hearing Date / Time
Wed, 09/25/2024 - 10:00
Nature of Proceedings
Motion by plaintiffs for summary adjudication of the issue of the Ibarras’ contractual duty to vacate the real property at 2965 Calle Noguera, Santa Barbara.
Tentative Ruling
John R. Till / Brian R. Paget of Paladin Law Group LLP for plaintiffs and cross-defendants Bret A. Stone and Danielle S. Stone, individually and as Trustees of the Tone Family Trust UTD 2/15/200
John J. Thyne III of Thyne Taylor Fox Howard, LLP for defendants and cross-complainants Luis Ibarra and Karina Carrillo
RULING
The motion will be denied, on grounds that (a) the motion is defectively constructed, (b) the motion fails to meet the initial burden of persuasion, and (c) there exist triable issues of material fact which preclude summary adjudication.
BACKGROUND
According to the parties, plaintiffs Bret A. Stone and Danielle S. Stone, individually and as trustees of the Stone Family 2000 Trust dated 2/15/2000 (collectively “Stones”) are owners of property at 2965 Calle Noguera, in Santa Barbara. They leased the property to Luis Ibarra and Karina Carrillo (collectively “Ibarras”), with an option to buy, with a provision that if they purchased the property, 50% of the rent they had paid would be applied to the purchase price. The Ibarras attempted to purchase the property before the lease expired but were unable to close escrow. They remained on as tenants and paid rent. They made a second attempt to purchase the property, and presented the Stones with the assignment of the purchase and sale agreement which included the right to rental payment credit. The Stones refused the assignment, and demanded that the Ibarras, but the escrow did not close.
Litigation ensued, with the Ibarras filing suit against the Stones, and the Stones filing an unlawful detainer action against the Ibarras. The litigation was settled when the parties and other involved real estate brokers and/or agents and entities on June 1, 2023 executed a document entitled “Enforceable and binding Term Sheet Re: Global Settlement.”
The Settlement Agreement contains 18 numbered paragraphs of terms. At ¶ 1, it required the Stones to enter into a 180-day listing agreement with the Ibarras broker of choice, Goodwin & Thyne Properties, Inc. (G&T), for sale of the property, with an initial listing price of $2,800,000, which had to be reduced by $45,000 every 45 days unless otherwise agreed in writing, among other terms. At ¶ 4, it required the Ibarras to pay rent of $6,500/month until the close of escrow, and to vacate the property no later than the close of escrow or the expiration of the 180-day listing term, whichever occurred first, unless they entered into a new written lease with the buyer. At ¶ 5, the Ibarras were required to pay the Stones $250/month from April 1, 2022 until the close of escrow or the expiration of the 180-day listing term, whichever occurred first. At ¶ 6, the Ibarras waived any claim to rent credits. At ¶ 8, the Settlement Agreement provided that the Ibarras and the Stones would split 50-50 any net proceeds, after expenses and costs related to the sale of the property have been paid, in excess of $1,950,000 on the sale of the property.
The property did not sell within the 180 day listing period, nor was any escrow opened within that period, which expired on December 5, 2023. The Stones then took the position that they owed no further obligations to the Ibarras under the Settlement Agreement and demanded that the Ibarras vacate the property. The Ibarras took the position that the 180-day listing agreement applied only to the requirement that the Stones list the property with G&T, but that upon its expiration, the Stones were still required to attempt to sell the property (either through another broker or on their own) and to split the net proceeds over $1,950,000 with the Ibarras upon its sale. Because they claimed the Stones had repudiated the Settlement Agreement in contending they owed no further obligations to the Ibarras, the Ibarras refused to vacate the property unless the Stones would confirm their obligation to sell the property and split the net proceeds over $1,950,000 with the Ibarras upon its sale.
The Stones filed their verified Complaint to enforce settlement agreement on December 18, 2023. The complaint alleges causes of action for breach of the Settlement Agreement and for declaratory relief, contending that the Ibarras breached the contract by failing to vacate the property upon expiration of the listing term on December 5, 2023. It alleges that the Ibarras made the monthly rental payments they were obligated to make under the Settlement Agreement but did not make them timely. It alleges that the Ibarras did not make the $250/month payments, which would total $5,000. Because the Ibarras had been willing in April 2022 to occupy the property for one month for a payment of $15,000, the Stones offered to permit them to stay until the end of December 2023, in exchange for that same $15,000, plus the $5,000 they were owed for nonpayment of the $250/month amount. The Ibarras made a deposit of $6,500 into the Stones bank account after the listing term, but the Stones deducted from it the $5,000 they allege they were owed and returned $1,500 to the Ibarras. The declaratory relief cause of action seeks a declaration that the Stones have a right to possession of the property, and that the Ibarras must vacate it.
The Ibarras filed their verified Answer to the Complaint on January 22, 2024, simultaneously with their filing of their verified Cross-Complaint for (1) breach of contract, (2) mistake, and (3) restitution (unjust enrichment). The Cross-Complaint alleges that the parties did not agree in the Settlement Agreement as to what would happen if the property did not sell within 180-days following the exclusive listing period with G&T, but that the Stones imply that they believe it relieved them of any obligation to sell the property or to share the proceeds with the Ibarras. The Ibarras contend that the failure of the property to sell within the 180-day listing period relieved the Stones of any obligation to continue to list the property with G&T, but that it did not relieve them of the obligation to sell the property and pay 50% of the gross proceeds in excess of $1,950,000 to the Ibarras. The Ibarras allege that their agreement to vacate the property at the end of the 180-day listing period was designed to amplify the likelihood of a sale following that initial listing period, and that they have not vacated because the Stones have not marked the property for sale since the end of that period. They allege they would not have agreed to settle the case in a manner that would not have required the sale of the property as soon as possible, even after the expiration of the 180-day listing period. They allege that the Stones are in material breach of the Settlement Agreement because they are attempting to enforce an agreement not accepted by the Ibarras, i.e., that the Settlement Agreement only required the Stones to try to sell the property for 180-days, after which they were relieved of all obligations under the agreement, including any obligation to sell the property or to pay the Ibarras 50% of the gross sales receipts over $1,950,000.
The Ibarras causes of action for mistake and for restitution (unjust enrichment) are based upon the parties’ failure to expressly address what would happen if the property did not sell within the 180-day listing period, and alleges that the Ibarras never agreed that the Stones would be relieved of all obligations under the Settlement Agreement if it did not sell within that period, and to interpret the Settlement Agreement in that manner would be unconscionable and would deprive the Ibarras of the primary object of the contract, i.e., to obligate the Stones to sell the property and distribute the proceeds as agreed between the parties.
The Stones filed their verified Answer to the Cross-Complaint on February 22, 2024.
On June 25, 2024, the Stones filed their motion to summarily adjudicate the duty issue that the Ibarras have a current duty to vacate the property. The Ibarras timely opposed the motion.
The Trial Confirmation Conference in the case is currently set for October 30, 2024.
MOTION
The Stones filed the current motion for summary adjudication on June 25, 2024, seeking to adjudicate a duty issue, i.e., that the Ibarras have a current duty to vacate the property.
Statement of facts
Argument
The motion first sets forth an introductory page, followed by four pages of apparent background information regarding the case, proceeding from the Stones original lease of the property to the Ibarras with an option to purchase, the failed purchase, the Ibarras status as holdover tenants, the second attempt by the Ibarras to purchase the property, the terms of which were not agreed to by the Stones, the Ibarras’ filing of the original unlimited civil action against the Stones, the Stones institution of unlawful detainer proceedings against the Ibarras, and the June 1, 2023, settlement of both of those actions through entry into the Enforceable and Binding Term Sheet Re: Global Settlement. The motion sets forth what the Stones contend it required of them and of the Ibarras, and they assert that they fulfilled their obligations under the agreement, and the Ibarras did not because they failed to vacate when required and continue to refuse to vacate. The motion then sets forth the procedural history of the filing of the complaint, the Ibarras answer and cross-complaint, and contends that the Ibarras have possessed the property since 12/1/23 without payments, that the Stones have refused and returned the Ibarras’ attempts to make payments, and that the Stones have paid the mortgage, property taxes, and insurance on the property.
The motion then proceeds to make four legal points:
First, the Settlement Agreement is a binding and enforceable contract between the parties. (Weddington Prods., Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.)
Second, the Stones contend that they have performed or are performing all obligations due by them under the Settlement Agreement. They first contend that they have no obligation under the Settlement Agreement to continue to try to sell the property—something on which the Settlement Agreement is silent, and it is silent on the issue because the parties did not agree in the Settlement Agreement what would happen if the property did not sell within the 180-days following the exclusive listing. Further, even if it had imposed such an obligation on the Stones, they have continued to market the property, obtaining a favorable all cash offer; the only reason escrow did not close was that the Ibarras refused to move out and their attorney threatened to involve the buyer in the litigation. The Stones engaged Berkshire Hathaway to view and evaluate the property, obtaining a recommendation that the property be staged and painted prior to listing, but the Ibarras will not vacate so that this can be done.
Third, the Settlement Agreement imposed upon the Ibarras what the Stones describe as a clear, unambiguous, unqualified, and unconditional obligation to vacate the property upon the expiration of the 180-day listing period or upon the close of escrow, whichever occurred first. They admit the property did not sell within the 180-day listing period, and that the listing agreement expired on December 5, 2023. As a result, the Settlement Agreement obligated them to vacate the property on December 5, 2023, when the 180-day listing period expired without the property entering escrow.
Fourth, the Ibarras have not vacated the property, and therefore have not performed their obligation under the Settlement Agreement.
From these four points, the Stones conclude that the Court should adjudicate in their favor the Ibarras’ duty, due since December 5, 2023, to vacate the property.
Evidence
The motion is supported by the declarations of plaintiff Bret A. Stone, and attorney Brian Paget. Attorney Paget’s declaration authenticates discovery propounded to Luis Ibarra, and the responses received from Mr. Ibarra to that discovery, and authenticated a copy of Ibarra’s Notice of Deposition and Request for Production of Documents for Nico Pollero. He further declared that the Ibarras refused to move out by the close of escrow for the Pollero offer, claiming that Thyne said the offer was a false offer.
The Stone declaration reiterates that the property was originally leased to the Ibarras with an option to purchase, quoting the single term providing that if the tenant decided to purchase the property 50% of the rent was to be applied to the purchase price, that Ibarras made an attempt to purchase the property during the lease but failed to close escrow, that the Ibarras remained in possession after expiration of the lease and paid rent, that the Ibarras made a second attempt to purchase the property in which, on the eve of closing they presented the Stones with an assignment of the purchase and sale agreement contending that the assignment included a right to credit off the purchase price of 50% of all rent they had paid. He refused to consent to the assignment and demanded the Ibarras close escrow, but the date for close of escrow passed without closing.
Stone declares that litigation ensured, with the Ibarras filing an unlimited civil action against the Stones and stopping paying rent, after which he served a notice to vacate and instituted an unlawful detainer action against them. The Stones and Ibarras settled those actions on June 1, 2023, by entering into the “Enforceable and Binding Term Sheet Re: Global Settlement,” which he authenticated. He describes what he contends were each parties’ obligations under the agreement, contending that the Stones’ obligations were to enter into a 180-day listing agreement with the Ibarras’ chosen agent, G&T, for an initial listing price of $2.8 million, and as long as it did not sell during the 180-day period the Stones were required to reduce the listing price by $25,000 every 45 days unless otherwise agreed by the property, and if the property were to sell during the 180-day listing period, the Stones were required to equally split with the Ibarras any net proceeds in excess of $1,950,000. He describes what he contends were the Ibarras’ obligations under the contract as agreeing to vacate the property upon expiration of the 180-day listing period or close of escrow, whichever occurred first, to pay $6,500 on the first of each month during the listing period, and pay an additional $250/month from April 1, 2022 until close of escrow or expiration of the listing period, whichever occurred first.
Stone declared that “we fulfilled our obligations under the Settlement Agreement.” They entered into the 180-day listing agreement with G&T to sell the property for an initial price of $2.8 million and reduced the price more than the required $25,000 every 45 days (reducing the price by a total of $405,000, for a final listing price of $2,395,000). No acceptable offer to purchase was secured, and the 180 day period ended on December 5, 2023, without the property being sold or entering escrow. He concludes from this that the Ibarras were therefore required to vacate the property by December 5, 2023. He declares that he repeatedly communicated both directly and through counsel that the Ibarras must vacate the property, but they refuse to do so. He declares that they failed to timely pay the $6,500 monthly payments, and failed to timely make the $250/month payments.
This action was filed on December 18, 2023, to enforce the settlement agreement, regain possession of the property, and recover damages, costs, and fees for the Ibarras’ breach of the agreement. He describes the causes of action asserted and notes the Ibarras’ filing of their answer and cross-complaint and its contentions. They have possessed the property since December 1, 2023, without making payments, but he acknowledges returning their attempts to do so for fear there would be a claim that he consented to their occupancy. He has paid the mortgage, property taxes, and insurance during that period.
He declares that the Ibarras contend that the agreement imposes a continuing duty to sell the property, and while he maintains he has no such obligation, he has committed to selling the property. He mentioned to several people in early April 2024 that they might need to sell the property to effectuate a 1031 exchange. On April 22, 2024, he received an all cash offer to purchase the property for $2,300,000 from Nico Pollero, and he authenticates that offer. After inspecting the property, Pollero reduced his offer to $2,200,000, and he authenticates the revised offer. He presented both offers to the Ibarras through counsel and asked that they move out or commit to mobbing out no later than the close of escrow to facilitate the sale. They refused, claiming that the offer was false, without further explanation. Without the ability to deliver the property free of occupants, they were unable to accept the offer. Pollero then told him that Thyne had threatened to take his deposition, and Thyne served a Notice of the Pollero deposition on Stone’s counsel. To further mitigate damages, he engaged a Berkshire Hathaway agent to evaluate the property for sale if the Pollero offer fell through and was advised that it could be sold for approximately $2,200,000 to $2,300,000 if it were painted, repaired, and staged, and he authenticated that letter. That evaluation was consistent with the input G&T received during the listing period, that the home needed to be fully staged and priced around 1.9, and didn’t show well with the current furniture. Pollero ultimately decided he was not the buyer, and did not want to become embroiled in litigation. Stone asserts that Thyne therefore scared away the only prospective buyer to make a market value offer. Since the Ibarras say they will only move out to facilitate a sale if they consent to the purchase price, the Stones agree to split with them all net proceeds in excess of $1,950,000, and the Stones agree the Ibarras are oily obligated to pay $6,750 ($6,500 + $250)/ month they occupy the property, Stone concludes that they will block all efforts to sell the property in the future. By failing to vacate so that the property can be painted and staged, the Ibarras are obstructing the Stones’ efforts to mitigate their damages.
OPPOSITION
Response to Statement of Facts.
The Ibarras agree that they entered into an enforceable and binding term sheet re: global settlement with the Stones on June 1, 2023. They dispute that the Stones have performed or are performing all obligations due by them under the Settlement Agreement, and contend the Stones have failed to honor their obligations under the Settlement Agreement. They agree that the Settlement Agreement provides that they must vacate the Property upon the expiration of the 180-day listing period or upon the close of escrow, whichever occurs first, and also agree that their obligation under the Settlement Agreement to vacate the Property became due on December 5, 2023, when the 180-day listing period ended without the Property closing or entering escrow, but contend that their obligation to vacate has been excused due to the Stones’ breach of the Settlement Agreement by refusing to sell their Property and distribute proceeds per the Settlement Agreement. They dispute the Stones Fact # 5, that the Ibarras did not vacate the Property by December 5, 2023, and have since continued to refuse to vacate the property, and contend they have repeatedly agreed to vacate the property in the event the Stones agree to honor the Settlement Agreement.
Argument
The Ibarras’ points and authorities started with a two-page introduction, followed by a more than four page factual background section, in which the Ibarras set forth their contentions and their version of the background of the disputes, the settlement agreement, and ensuing events, as more further articulated in the declarations submitted in support of the opposition. Based upon the facts they set forth, the Ibarras made the following contentions:
First, the Ibarras contend that there are triable issues of material fact regarding whether their duty to vacate was excused by the Stone’s breach of the Settlement Agreement. The motion rests solely upon the Ibarras’ duty to vacate the property, and relies on the “fallacious” claim that the Stones are not in breach of the settlement agreement because they were not required to sell the property outside the first 180 days after the agreement was signed, or because they have continued to attempt to sell the property, although they have refuted the agreement to split the net proceeds over $1,950,000 with the Ibarras. They claim they had no further obligation to the Ibarras after the expiration of the 180 day listing period, which creates an issue whether the Stones themselves are in breach of the Settlement agreement.
The Ibarras argue that when on party to a contract feels that the other contracting party has breached its agreement, the non-breaching party may either stop performance and assume the contract is avoided, or continue its performance and sue for damages, but under no circumstances may the non-breaching party stop performance and continue to take advantage of the contract’s benefits, citing Jay Bharat Developers, Inc. v. Minidis (2008) 167 Cal.App.4th 427. Regardless of who breached the contract, the other is authorized to stop performance pending reaffirmation of the contract. However, the Stones cannot claim to be a non-breaching party, and stop performance by refuting their obligation to sell the property and split the proceeds in excess of $1,950,000 with the Ibarras, while still demanding the Ibarras abide by the contract.
While the Stones claim there is no dispute that the Settlement Agreement does not affirmatively require them to sell the Property after 180 days, neither does it limit the Stones’ obligation to sell the property to only 180 days. They contend they were relieved of the obligation to sell the property and split the net proceeds in excess of $1,950,000 with the Ibarras, which was the primary motivation for the Ibarras to enter into the agreement, because the agreement does not specifically require the Stones to continue to try to sell the property after the initial listing period of 180 days with the Ibarras’ chosen broker. The legal and factual question is whether the absence of a term in the settlement agreement describing what will happen if the property does not sell within the first 180 days while listed with the Ibarras’ broker means that the entire obligation to sell the property is relieved, or that the Stones have an ongoing obligation to sell the property after the Ibarras vacate the premises, whether with a new broker or on their own.
The Ibarras contend that this is an issue of material fact which will require the testimony of the parties regarding their understanding of what would happen if the property did not sell within 180 days, and whether they would have entered into the agreement if they knew that the other party’s interpretation would control. For the Stones to prevail, they must prove they have performed all conditions or that their performance was excused. They have only provided conclusory claims that they have performed all conditions required of them, but they cannot prove they have, because they deny they have any further obligations to the Ibarras because the property did not sell in the first 180 days. The agreement did not limit the obligation to sell to only 180 days, and given the Stones’ contention that the property is worth $2,300,000, the division of proceeds above $1,950,000 would constitute approximately $106,000 that the Ibarras would be giving up if the property did not sell within the 180 day period, which they describe as illogical to believe anyone would agree to such a thing. They have agreed to vacate the property if the Stones will affirm the obligation to divide the net proceeds over $1,950,000.
Second, the Ibarras contend that there are triable issues of material fact regarding whether the Stones are currently attempting in good faith to sell the property, or what distribution of proceeds would ensue. First, they contend Pollero made a bona fide offer but did not proceed because the Ibarras would not vacate, but this is not true, and the offer was not a bona fide offer. He made an all cash offer, but did not have the cash, and made the offer at Stone’s request to put pressure on the Ibarras. Second, the Stones had not agreed to split the net proceeds in excess of $1,950,000 with the Ibarras in the event Pollero did purchase and close escrow on the property.
While the Stones contend they are attempting in good faith to sell the property because they have obtained an opinion of the value of the property from a Berkshire Hathaway agent, the Ibarras have cooperated with that agent, and advised her that if the Stones would affirm their obligation to split net proceeds in excess of $1,950,000 from sale of the property they would vacate and allow it to be sold. The Ibarras conclude that these are issues of material fact with respect to whether either the Stones or the Ibarras have breached the agreement.
Third, the Ibarras contend that triable issues of material fact exist concerning whether the court could or should imply terms into the Settlement Agreement. To find that the settlement agreement would not require the Stones to attempt to sell the property after expiration of the 180 day period, the Court would need to imply terms into the contract to determine what is to occur more than 180 days following entry into the agreement.
The Ibarras argue that even when a written contract exists, evidence derived from experience and practice can trigger the incorporation of additional implied terms (citing Retired Employees Association of Orange County, Inc. v. County of Orange (2011) 52 Cal.4th 1171, 1178-1179), and implied terms stand on equal footing with express terms, provided that they never be read to vary express terms (citing Carma Developers, Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 374). There are express terms which appear in disparate provisions which do not relate to one other, i.e., the obligation to list the property for 180 days with the Ibarras’ broker of choice (¶ 1), and the obligation to sell the property and distribute the net proceeds in excess of $1,950,000 between the Stones and the Ibarras (¶ 8). The terms should not be conflated, because doing do is inconsistent with the intentions of the parties, and would vary the express terms.
Evidence
The opposition is supported by the declarations of John J. Thyne III, Luis Ibarra, and Karina Carrillo. The three declarations are virtually identical, reflecting only changes in perspective of the speaker and, in one paragraph (¶ 27), a brief supplemental comment in Mr. Thyne’s declaration.
The declarations state that the Ibarras entered into the settlement agreement with the Stones on June 1, 2023, ending 14 months of intense litigation in multiple lawsuits involving more than 10 parties. The purpose of the agreement was to create a process by which the property could be sold, and proceeds would be split between the defendants, who had claimed an enforceable option to purchase the property for $1,850,000 less rent credits, and the plaintiffs who claimed there was no right to assign the option. The Ibarras agreed to settle in exchange for an agreement that the Stones would sell the property and split net proceeds in excess of $1,950,000 with the Ibarras, as well as terms that the property would be listed with the Ibarras’ broker of choice for 180 days, that the Ibarras’ broker would pay a settlement sum to the Stones, and that the Ibarras would receive a return of certain deposits they had with the Stones. The declarations contend the agreement for the Stones to sell the property was not limited to 180 days, and if it did not sell in that period the Stones would sell it with a different broker or no broker but would sell the property as soon as possible.
For the first 180 days, Mr. Stone worked with an agent in G&T, but Thyne believes that he did not cooperate with the agent in good faith to adapt to a changing real estate market and address the low commission offered to cooperating buyers’ agents. On December 7, Thyne emailed in response to Stone that the property needed to be sold as soon as possible and the Ibarras still receive their share of net proceeds over $1,950,000 per the agreement. In response, he was advised by Stone that since the listing period expired with no sale, the Stones had fulfilled their end of the settlement agreement and owed no further obligations to the Ibarras. Thyne responded that this was incorrect, and that he would advise the Ibarras not to leave the property due to Stone’s refusal to acknowledge the responsibility to sell and pay the Ibarras the differential between $1,950,000 and the net sale proceeds. The declarations contend that the other emails attached to attorney Paget’s declaration show that Stone did not participate in the listing in good faith but refusing to adjust the pricing and cooperating commission structure to improve the likelihood of a sale of the property.
The property did not sell within 180 days, and the declarations contend the Stones remained obligated to pay 50% of the net proceeds to the Ibarras. Thyne advised the Ibarras not to move out of the property because the Stones had breached the settlement agreement and would not acknowledge an intent to honor the agreement upon sale. The declarants believe that the Ibarras would not have entered into the agreement if it contained a term that limited the Stones’ obligation to try to sell the property only in the first 180 days.
In February 2024, the Stones contend that Nico Pollero made a bona fide offer to purchase the property for $2,300,000. Thyne scheduled a time for Pollero to visit and inspect the property, and the Ibarras cooperated with the visit. Thyne recognized Pollero as a real estate agent who works at a local brokerage, and he telephoned the broker to inquire whether Pollero had made a bona vide offer to purchase the property. The broker reportedly spoke to Pollero and called Thyne back to say the offer was not legitimate, and it had been prepared by Pollero at Stone’s request to pressure the Ibarras. Thyne then advised Stone’s counsel that he was aware the offer was not legitimate, after which Stone claimed that Pollero was a legitimate purchaser. Thyne advised Stone’s counsel he knew the offer was false and an artifice and that he should instruct his client to refrain from presenting such instruments. He advised further that he would depose Pollero to establish the offer was not legitimate. After Thyne scheduled the deposition, he was advised that Pollero had rescinded the offer. He did not pursue the deposition further, but given that the Stones continue to claim that Pollero was a bona fide purchaser, the deposition may need to be taken before trial.
The declarations then discuss that Thyne had a conversation with Gloria Easter, who reported she was going to become a listing agent for the Stones to sell the property. Thyne arranged for her to have access to the property o assess its value. They discussed that the Ibarras would cooperate with listing and marketing efforts, and would move out of the property in the event a potential purchaser did not want them to remain as tenants, in the event that the Stones would agree to continue to honor the settlement agreement—but that the Stones’ attorney had advised they would not honor the agreement. Thyne offered to assist Ms. Easter in marketing and sale of the property, in the event the parties could settle their issues. He arranged the showing for Ms. Easter and advised the Stones’ attorney that the Ibarras were willing to vacate if the Stones agreed they would honor the agreement as written, and the declarations further note they remain willing.
The declarations assert that plaintiffs claim that the Stones were only obligated to split the proceeds with the Ibarras if the property sold during the listing period, but that is not what the agreement says, and the Stones’ attempt to emphasize the words “during the listing period” misleads the court. The agreement did not limit the obligation to sell the property to the 180 days during which it was listed with the Ibarras’ broker of choice. The Ibarras did not agree, and would not have agreed, to such a limitation, and it would be illogical for any party to agree to give up more than $106,000 in exchange for a 180 day listing effort. The declarations assert the declarants’ beliefs that the Ibarras’ obligation to vacate the property was excused by the Stones’ breach of the settlement agreement for failure to agree to honor the distribution of proceeds provision in Paragraph 8, irrespective of when the property is sold.
REPLY
First, the Stones assert that the Settlement Agreement does not impose upon them a duty to continue to try to sell the property after expiration of the 180-day listing period with G&T.
Second, the Stones argue that their breach of a duty to try to sell the property could not have retroactively excused the Ibarras’ earlier breach of their duty to vacate the property.
Third, the Stones contend they have been trying in good faith to sell the property, so even if a duty existed for them to continue to market the property, they are not in breach of it. The secured a favorable all cash offer. They also engaged a broker to evaluate the property, and obtained the recommendation that it be staged and painted prior to listing.
Finally, Stones contend they have been prevented from selling the property by the Ibarras’ refusal to move out of the property, which has prevented them from painting, fixing, and staging the property, or being able to deliver the property at close of escrow free of “squatters” and free from the risk of becoming embroiled in litigation. They argue the only reason the property wasn’t sold to Nico Pollero after his $2.2 million cash offer was because the Ibarras refused to vacate, even after close of escrow, and their attorney threatened to take his deposition and involve him in the litigation. The Stones contend that Mr. Thyne’s contention that the offer was false is inadmissible for a variety of reasons, including hearsay, lack of foundation, improper expert opinion, and legal conclusion. If the offer was good, all the Ibarras needed to do was agree to vacate when escrow closed, and they would obtain what they claim to want—a sale of the property, and the parties could then have dealt with the issue of whether the proceeds in excess of $1,950,000 would need to be split. If it failed to close for whatever reason, they would remain in possession. They have refused to move out unless the Stones agree to split those net proceeds above $1,950,000—but they cannot use the Stone’s refusal to split those proceeds as justification for refusing to vacate the property, when their refusal to vacate the property prevents the Stones from selling the property—either at the highest possible price, or potentially at all. The Stones then conclude that their duty to sell the property after the 180-day listing period ended and to split the proceeds above $1,950,000 with the Ibarras, if it existed at all, was excused by the Ibarras breach of their duty to vacate the property at the end of that period.
ANALYSIS
The motion will be denied, on grounds that (a) the motion is defectively constructed, (b) the motion fails to meet the initial burden of persuasion, and (c) there exist triable issues of material fact precluding summary adjudication of the duty issue.
1. Standards Applicable to Motions for Summary Judgment or Adjudication.
A defendant’s motion for summary judgment asks the court to determine that the entire action has no merit, and to terminate the action without the necessity of a trial. (Code Civ. Proc., § 437c, subd. (a).) The procedure enables the court to look behind the pleadings to determine whether the party against whom the motion is directed has evidence to back up the claims. The court must determine from the evidence presented that there is no triable issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (c).)
Similarly, a party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no merit to a claim for damages as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. (Code Civ. Proc., § 437c, subd. (f)(1).) A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty. (Ibid.) Further, a motion for summary adjudication is procedurally identical to a motion for summary judgment. (Code Civ. Proc., § 437c, subd. (f)(2); Serri v. Santa Clara University (2014) 226 Cal.App.4th 830, 859.)
In permitting the summary adjudication of an issue of duty, the Legislature did not intend the words to apply only to negligence causes of action. Rather, if, under the facts and circumstances of a given case, a court finds it appropriate to determine the existence or non-existence of a duty in the nature of a contractual obligation, it may properly do so by a ruling on that issue presented by a motion for summary adjudication. (Linden Partners v. Wilshire Associates (1998) 62 Cal.App.4th 508, 518-519, citing Regan Roofing Co. v. Superior Court (1994) 24 Cal.App.4th 425, 435.) That issue of duty to be resolved on summary adjudication need not dispose of a cause of action or affirmative defense or terminate some portion of an action. (Linden Partners, supra, 62 Cal.App.4th at pp. 519-520, disagreeing with Regan Roofing Co., supra, 24 Cal.App.4th at p. 436.)
The pleadings play a key role in a summary judgment or adjudication motion. (Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 493.) It is the allegations of the complaint to which the motion must respond (Todd v. Dow (1993) 19 Cal.App.4th 253, 258), and the pleadings serve as the measure of materiality for the motion. (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.) The motion must be supported by evidentiary facts, not merely the ultimate facts. Further, conclusions of fact or law are not sufficient to support a motion for summary judgment. (Snider v. Snider (1962) 200 Cal.App.2d 741, 751.)
All facts that could make a difference in the disposition of the motion must be set forth in the separate statement of material facts which is required to accompany the motion. (Cal. Rules of Court, rule 3.1350(c)(2) and (d)(1)(B) and (C).) “Material facts” are facts that relate to the cause of action, claim for damages, issue of duty, or affirmative defense that is the subject of the motion and that could make a difference in the disposition of the motion. (Cal. Rules of Court, rule 3.1350(a)(2).) The separate statement serves two important functions in a summary judgment proceeding: it notifies the parties which material facts are at issue, and it provides a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts. (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 65, 875.) Facts which are stated in a place other than the separate statement need not be considered by the court in resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)
Where a plaintiff seeks summary adjudication of an issue of duty, its burden is to produce admissible evidence to support each element necessary to the resolution of the issue of duty that is the subject of the motion. (Code Civ. Proc., § 437c, subd. (p)(1).) The plaintiff must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 841.) If the plaintiff meets its initial burden, the burden then shifts to the defendant to show that a triable issue of one or more material facts exists as to that issue of duty. (Code Civ. Proc., § 437c, subd. (p)(1).) To meet that burden, the party opposing the motion must produce admissible evidence making a prima facie showing of the existence of a triable issue of fact. (Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 468-469; Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 72.)
In ruling on a motion for summary judgment or adjudication, the trial court must consider all of the evidence and all of the inferences reasonably drawn therefrom (Code Civ. Proc., § 437c, subd. (c)), and must view the evidence and inferences in the light most favorable to the opposing party. (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at 843.) In examining the sufficiency of the affidavits filed in connection with a summary judgment or adjudication motion, those filed by the moving party are strictly construed, and those of the opposing party are liberally construed. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21.)
In resolving the motion, the court may not weigh the evidence. (Binder v. Aetna Life Ins. Co. (1999) 75 Cal.App.4th 832, 840.) Rather, the role of the trial court in resolving a summary judgment motion is to determine whether issues of fact exist, not to decide the merits of the issues. (Molko v. Holy Spirit Assn. (1988) 46 Cal.3d 1092, 1107; see also Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 10:270.) A triable issue of material fact exists only if the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar v. Atlantic Richfield, supra, 25 Cal.4th at 850.) Any doubts as to the propriety of granting the motion should be resolved in favor of the party opposing the motion. (Molko v. Holy Spirit Assn., supra.) Further, summary judgment or adjudication cannot be granted based upon inferences reasonably deducible from the evidence, if they are contradicted by other inferences or evidence that raise a triable issue as to any material fact. (Code Civ. Proc., § 437c, subd. (c).)
If a motion for summary adjudication is granted, at the trial of the action, the cause or causes of action within the action, affirmative defense or defenses, claim for damages, or issue or issues of duty as to the motion that has been granted, shall be deemed to be established and the action shall proceed as to the cause or causes of action, affirmative defense or defenses, claim for damages, or issue or issues of duty remaining. (Code Civ. Proc., § 437c, subd. (n)(1).)
2. The Motion is Procedurally Defective.
A. The motion’s Separate Statement is improper and fails to support the motion.
The manner in which the Stones’ Separate Statement of Material Facts in support of their motion for summary adjudication is constructed reflects a fundamental misunderstanding of the requirements of separate statements, specifically, and their purpose in supporting a summary judgment or adjudication motion, generally.
The Stones’ Separate Statement of Material Facts is insufficient to support their motion. Rather than setting forth the underlying material facts, with specific references to evidence to support each such underlying material fact, from which it could be concluded that the Stones have performed or are performing all obligations due by them under the Settlement Agreement, they set forth only the impermissible legal conclusion, as Fact No. 2, that “The Stones have performed or are performing all obligations due by them under the Settlement Agreement.” This is impermissible. As this Court noted above, it has long been held that a motion for summary judgment or adjudication must be supported by evidentiary facts, not merely the ultimate facts, and that conclusions of fact or law are not sufficient to support a motion for summary judgment. (Snider v. Snider (1962) 200 Cal.App.2d 741, 751.)
While purported Fact No. 2 claims that the Stones have performed or are performing all obligations due by them under the Settlement Agreement, the Separate Statement makes no attempt whatsoever to identify or articulate what obligations were owed by the Stones under the Settlement Agreement, much less support the performance of each such obligation within the Separate Statement by specific reference admissible evidence to support each and every such fact. Rather, that single “material fact” (i.e., impermissible legal conclusion) references 19 separate paragraphs of the declaration of plaintiff Stone as its “supporting evidence,” without making any attempt so reference what actual “facts” are set forth in those 19 paragraphs, or making any attempt to explain how they support the legal conclusion. Those 19 pages span approximately one-half of the six-page declaration.
In drafting the motion in this manner, the Stones have precluded the Court and the Ibarras from quickly being able to determine what material facts actually support that conclusion, such that they have a reasonable ability to ascertain whether they support the conclusion, or are disputed in any material effect—thereby effectively thwarting the very reasons why the summary judgment statute requires moving parties to provide separate statements. As this Court noted above, the separate statement serves two important functions in a summary judgment proceeding: it notifies the parties which material facts are at issue, and it provides a convenient and expeditious vehicle permitting the trial court to hone in on the truly disputed facts. (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 65, 875.)
The manner in which the separate statement was constructed has left the Ibarras and the Court in the position of having to scour the supporting declarations, numerous exhibits, and arguments set forth in the memorandum of points and authorities, in order to ascertain the substance of all of the relevant provisions of the Settlement Agreement. This has deprived the Ibarras of any clear recitation of the true facts which must be addressed in opposing the motion, and has deprived the Court of any expedient means of evaluating the truth and accuracy of the legal conclusion set forth in the Separate Statement. As this Court also noted above, facts which are stated in a place other than the separate statement need not be considered by the court in resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)
B. The motion’s memorandum of points and authorities is improperly centered around facts which never appear in the Separate Statement and fails to establish entitlement to summary adjudication.
Similarly, the argument set forth in the memorandum of points and authorities is also centered around facts which are not set forth in the Separate Statement. The Stones contend that to succeed in adjudicating the Ibarras’ duty to vacate the property in the Stones favor, they need only show (1) the existence of a contract with the Ibarras, (2) the Stones’ performance of their contractual obligations or excuse for nonperformance, (3) the contract’s imposition on the Ibarras of a currently due obligation to vacate the property, and (4) the Ibarras’ breach of that obligation.
Given that both parties agree that the Settlement Agreement was a binding contract, the first element is not in dispute. With respect to the second element, however, the Stones’ arguments are once again centered around facts which are not set forth in their Separate Statement. The motion raises the Ibarras’ contention that the Stones’ obligation to sell the property and divide the net proceeds extended beyond the 180-day exclusive listing period, the Stones contend that the Settlement Agreement is silent on that issue, does not impose that obligation, and that the parties did not agree as to what would happen if the property did not sell within the 180-day period. However, the actual terms of the Settlement Agreement, and whether nature and extent of the obligations it imposed on the Stones, are not facts to be found anywhere in their Separate Statement. The Separate Statement provides no means through which the Court could expediently determine the obligations it imposes on all parties to the Settlement Agreement, or to evaluate the language of the Settlement Agreement as a whole such that it could expediently ascertain whether the failure to mention what would happen if the property did not sell within the 180-day period was intentional and meant that there was no such obligation—which would be curious, since that result could have been clearly articulated and removed all doubt had it been the intention of all of the parties—or whether it never occurred to or was contemplated by any of the parties to the Settlement Agreement that there was any possibility that the property would not sell within the initial 180-day exclusive listing period, whether because of the nature of the Santa Barbara real estate market at the time the agreement was entered into, or for some other reason.
The Stones’ argument continues, contending that even if the agreement imposed the obligation on them to continue to market the property after the expiration of the 180-day exclusive listing period, they have continued to do so, and obtained an all-cash offer that was thwarted by the Ibarras refusal to vacate and their counsel’s threats to depose the buyer and involve him in the litigation. They argue further that they have engaged Berkshire Hathaway to evaluate the property, but they are unable to comply with the recommendations that it be painted and staged, because the Ibarras refuse to vacate. Of course, once again, not a single fact set forth in this argument is reflected in the Stones’ Separate Statement.
Additionally, the Court notes that the argument only addressed a portion of the Ibarras’ contentions made both in their verified answer and in their verified cross-complaint, in their cross-complaint, that the Stones’ obligations to divide the net proceeds over $1,950,000 with the Ibarras also continued beyond the initial 180-day exclusive listing period—something which the Stones have expressly refuted.
In reaching the third element, i.e., that the contract imposed on the Ibarras a currently due obligation to vacate the property, the Stones’ memorandum of points and authorities argues that the Settlement Agreement requires the Ibarras, “without qualification or condition,” to vacate the property upon the expiration of the 180-day listing period or upon the close of escrow, whichever occurs first. Again, this is well beyond any of the limited facts set forth in their Separate Statement. The terms of the Settlement Agreement, other than their paraphrase of the obligation to vacate, are nowhere set forth in the Separate Statement, and there is nothing in the Separate Statement that supports the argument that the obligation is “without qualification or condition.”
Finally, with respect to the fourth element, i.e., that the Ibarras have breached their obligation, the Stones argue only that the Ibarras have not vacated the property. Certainly, they have not, but whether or not that fact is sufficient to establish their breach of the Settlement Agreement is not supported by facts within the Separate Statement as a whole.
C. Impact of procedural deficiencies.
As this Court noted above, a motion for summary judgment must be supported by evidentiary facts, not merely the ultimate facts, and conclusions of fact or law are not sufficient to support a motion for summary judgment. (Snider v. Snider (1962) 200 Cal.App.2d 741, 751.) Further, all facts that could make a difference in the disposition of the motion must be set forth in the separate statement of material facts which is required to accompany the motion (Cal. Rules of Court, rule 3.1350(c)(2) and (d)(1)(B) and (C)), in order to both satisfy basic due process requirements by clearly notifying the parties which material facts are at issue and also to provide an expeditious vehicle to permit the trial court to hone in on the truly disputed facts. (Beltran v. Hard Rock Hotel Licensing, Inc. (2023) 97 Cal.App.5th 65, 875.) The court also need not consider facts stated in a place other than the separate statement, when resolving the motion. (Fleet v. CBS, Inc. (1996) 50 Cal.App.4th 1911, 1916, fn. 3.)
The Court would be well within its discretion to (a) find that the motion for summary adjudication necessarily fails because it relies on conclusions of fact and law that are insufficient to support such a motion, and (b) to ignore the numerous clearly relevant facts which are never mentioned in the Separate Statement, in contravention of clear summary judgment law. However, as more fully discussed in the following section, even if the Court were to excuse these grave defects and consider the facts which are not properly set forth in the Separate Statement and which are necessary to support the impermissible legal conclusion set forth in the separate statement, the Court would still conclude that the issue is not amenable to resolution on summary adjudication.
3. The Motion Fails to Establish Entitlement to Summary Adjudication of the Duty Issue, as a Matter of Law on Undisputed Facts.
The Stones’ motion for summary adjudication contends that the Stones had no obligation to continue to market the property or to divide the net proceeds of any sales price over $1,950,000 with the Ibarras, after the initial 180-day exclusive listing period expired. In their reply papers, the Stones further assert that the motion to summarily adjudicate the duty issue should be granted because the language of the Settlement Agreement is clear and is “not reasonably susceptible” to such an interpretation. The argument ignores the analytical framework of the issue which this Court is obligated to follow in order to determine the issue and, once that analytical framework is utilized, it becomes apparent that the issue is not amenable to resolution on summary adjudication.
A. Potentially relevant principles related to breach of contract.
To recover on a cause of action for breach of contract, the plaintiff must establish: (1) the existence of a contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s beach, and (4) damage to plaintiff as a result of defendant’s breach (Regan Roofing Co. v. Superior Court (1994) 24 Cal.App.4th 425, 434-435, disapproved on other grounds in Crawford v. Weather Shield Mfg, Inc. (2008) 44 Cal.4th 541, 565.)
A plaintiff suing for breach of contract must prove it has performed all conditions on its part, or that it was excused from performance. (Consolidated World Investments, Inc. v. Lido Preferred Ltd. (1992) 9 Cal.App.4th 373, 380.) One who himself breaches a contract cannot recover for a subsequent breach by the other party. (Silver v. Bank of America, N.T. & S. A. (1941) 47 Cal.App.2d 639, 645.) In contract law, a material breach excuses further performance by the innocent party, and normally the question of whether a breach of an obligation is a material breach, so as to excuse performance by the other party, is a question of fact. (Plotnik v. Meihaus (2012) 208 Cal.App.4th 1590, 1602-1603.)
There is no actual breach of a contract until the time specified therein for performance has arrived. (Taylor v. Johnston (1975) 15 Cal.3d 130, 137.) Further, a cause of action for breach of contract does not accrue before the time of breach. (Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 479, 488.) Nonetheless, if a party to a contract expressly or by implication repudiates the contract before the time for his or her performance has arrived, an anticipatory breach is said to have occurred. (Romano v. Rockwell International, Inc. (1996) 14 Cal.4th 479 , 489.) A contract is totally breached and an anticipatory repudiation occurs when the promisor without justification and before he has committed a breach, makes a positive statement to the promise indicating that he will not or cannot substantially perform his contractual duties. (Gold Mining & Water Co. v. Swinerton (1943) 23 Cal.2d 19, 29.) If the anticipatory breach is sufficiently significant, it discharges the other party’s obligations and creates in the other party the right to pursue remedies for breach immediately. (Howard S. Wright Construction Co. v. BBIC Investors, Inc. (2006) 136 Cal.App.4th 228, 243, citing Romano v. Rockwell International, Inc, supra, 14 Cal.4th at p. 489.) Whether an anticipatory breach or repudiation of the contract has occurred is ordinarily a question of fact and intent, and must be determined by the facts in the particular case. (Gold Mining & Water Co. v. Swinerton, supra, 23 Cal.2d at p. 28.)
A contract may be rescinded if the consent of the rescinding party was given by mistake. The party attempting to void the contract as a result of mistake must also show that it would suffer material harm if the agreement were enforced, though that need not be a pecuniary loss. (Habitat Trust for Wildlife, Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1332-1333.) Mistake of fact is a mistake, not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in (1) an unconscious ignorance or forgetfulness of a fact past or present, material to the contract; or (2) belief in the present existence of a thing material to the contract, which does not exist, or in the past existence of such a thing, which has not existed. (Civ. Code, § 1577.) Under Section 1577, there is no authority for rescission based upon a mistake regarding future events. (Paramount Petroleum Corp. v. Superior Court (2014) 227 Cal.App.4th 226, 245.) In determining whether a mistake is a mistake of fact or an error in judgment, it is the facts surrounding the mistake, not the label, i.e., ‘mistake of fact’ or ‘mistake of judgment,’ which should control. (Ibid.)
B. Principles of contractual interpretation.
The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264.)
“The interpretation of a written instrument, even though it involves what might properly be called questions of fact [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. [Citations.] Extrinsic evidence is ‘admissible to interpret the instrument, but not to give it meaning to which it is not reasonably susceptible’ [citations], and it is the instrument itself that must be given effect. [Citations.] It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence.” (Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes (2011) 191 Cal.App.4th 435, 458, quoting Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.)
The mutual intention to which the courts give effect is determined by objective manifestations of the parties’ intent, including the words used in the agreement, as well as extrinsic evidence of such matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912, citing (Civ. Code, §§ 1635–1656; Code Civ. Proc., §§ 1859–1861, 1864; Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal.App.4th 1791, 1814; and 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, §§ 688–689, pp. 621–623.)
Where the meaning of the words used in a contract is disputed, the trial court must provisionally receive any proffered extrinsic evidence which is relevant to show whether the contract is reasonably susceptible of a particular meaning. (Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1350, citing Pacific Gas & Elec. Co. v. G.W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 39-40.) It is reversible error for a trial court to refuse to consider such extrinsic evidence on the basis of the trial court’s own conclusion that the language of the contract appears to be clear and unambiguous on its face. Even if a contract appears unambiguous on its face, a latent ambiguity may be exposed by extrinsic evidence which reveals more than one possible meaning to which the language of the contract is reasonably susceptible. (Id. at p. 1351, and authorities cited therein.)
The interpretation of a contract involves a two-step process, in which the court first provisionally receives all credible evidence concerning the parties’ intentions to determine “ambiguity,” i.e., whether the language is reasonable susceptible to the interpretation urged by the party. If, in light of the extrinsic evidence, the court decides the language is ‘reasonably susceptible’ to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step—interpreting the contract. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) The trial court’s resolution of an ambiguity is a question of law if no parol evidence is admitted or if the parol evidence is not in conflict. (Id, at p. 1166.) However, where the parol evidence is in conflict, the trial court’s resolution of that conflict is a question of fact, and must be upheld if supported by substantial evidence. (Ibid.) When two equally plausible interpretations of the language of a contract may be made, parol evidence is admissible to aid in interpreting the agreement, thereby presenting a question of fact which precludes summary judgment if the evidence is contradictory. (Wolf v. Superior Court, supra, 114 Cal.App.4th at p. 1351.) Where a conflict in the evidence exists, it must be resolved in the trial court, as with any question of fact, before the court can declare the meaning of the contract as a matter of law. (Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 852.)
Indeed, when the terms of a contract are ambiguous or uncertain, it is the duty of the trial court to construe it after the parties are given a full opportunity to produce evidence of the facts, circumstances and conditions surrounding its execution, as well as the conduct of the parties to the contract, and the interpretation of the contract presents a question of fact which is inappropriate for summary judgment. (Visitacion Investment, LLC v. 424 Jessie Historic Properties, LLC (2023) 92 Cal.app.5th 1081, 1093.)
The test for admitting extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and unambiguous on its face, but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. (Pacific Gas & Elec. Co. v. G.W. Thomas Drayage etc. Co., supra, 69 Cal.2d at p. 37.)
C. Application.
As noted above, the Court cannot simply look at the terms of a contract, declare them to be clear and unambiguous, and upon that declaration enter summary judgment on the contract, or summary adjudication of a contractual duty issue. Rather, the Court must first ascertain if the meaning of the words of the contract is disputed, and if they are, to consider any proffered extrinsic evidence which is relevant to show whether the contract is reasonably susceptible of a particular meaning—and it is reversible effort to refuse to do so upon the trial court’s own conclusion that the language appears to be clear and ambiguous on its face. If a latent ambiguity is exposed by consideration of that extrinsic evidence, and two equally plausible interpretations of the language of the contract may be made, parol evidence is then admissible to aid in interpreting the agreement, and a question of fact exists which precludes summary judgment if that evidence is contradictory.
In this case, the only terms of the Settlement Agreement upon which the Stones’ motion relies in contending that the Ibarras have a current duty to vacate the property “without qualification or condition” (Motion @ p. 12, lines 20-21) are set forth in a portion of ¶ 4. That paragraph requires the Ibarras to “vacate the Property no later [than] the close of escrow or the expiration of the 180-day listing term, whichever occurs first.” The parties agree that the listing agreement expired on December 5, 2023, without any sale of the property, or the commencement of any escrow for purposes of the sale of the property. As a result, simply taking those terms at face value, it appears that the Ibarras have a current duty to vacate the property, although the Court will note that those limited terms are insufficient to establish that the duty exists “without qualification or condition” with respect to the terms of the Settlement Agreement as a whole, as claimed by the Stones in their motion.
As noted, however, this is only the beginning of the Court’s inquiry into the meaning of the contract’s terms, not the end.
The Ibarras note that the Settlement Agreement was entered into by the Stones, the Ibarras, and others, to settle an unlimited civil lawsuit they filed against the Stones, and the Stones’ subsequently-filed unlawful detainer action against them, arising from the prior lease of the property by the Stones to the Ibarras with an agreement that, if the Ibarras purchased the property, one-half of the amount they had paid in rent would be credited toward the purchase price. The Ibarras had once unsuccessfully attempted to purchase the property, but had been unable to close escrow. After continuing in possession and making monthly rental payments as had been required by the lease, the Ibarras again made an attempt to purchase the property, submitting to the Ibarras an assignment of the option agreement which included the credit toward the purchase prices of 1/2 of the amount of rent which had been paid. When the Stones refused to accept that agreement, the Ibarras filed suit. The Ibarras represent that the litigation was intense and contentious.
It was in resolution of this contentious litigation that the parties entered into the Settlement Agreement at issue. In exchange for giving up their right to purchase the property for $1,850,000, to which 1/2 of the amount they had paid in rent was to be credited, and with other contractual terms and provisions, the parties agreed, among other things: (a) in ¶ 1 that the Stones would enter into a 180-day listing agreement for the property with G&T, the Ibarras’ broker, with an initial listing price of $2,800,000, which had to be reduced by $25,000 every 45 days unless otherwise agreed, and provided G&T with the authority to submit recommendations to the Stones which, if not accepted, would be submitted to mediation; (b) in ¶ 3 required the Ibarras to cooperate with the listing and showings, and keep the property and landscaping clean and safe during the listing term; (c) in ¶ 4 provided that the Ibarras “shall pay” $6,500/month to Stone until the close of escrow “and will vacate the Property no later [than] the close of escrow or the expiration of the 180-day listing term, whichever occurs first,” but provided the Ibarras with the ability to stay in possession if they entered into a new lease with the buyer; (d) required other monthly payments of $250/month from April 1, 2022 until the close of escrow or the expiration of the 180-day listing term, whichever occurred first; and (e) in ¶ 8, provided : “Ibarra and Stone shall split 50-50 any net proceeds, after all expenses and costs related to the sale of the Property have been paid in excess of $1,950,000 on the sale of the Property such that the formula will be: Gross Sales Price minus 100% of commissions paid minus 100% of closing costs (including title/escrow fees and insurance, transfer taxes, recording fees; but exclusive of mortgage debt repayment, property taxes other than transfer tax, or other personal expenses of Stone) minus $1,950,000 = NET to be split 50% each to Ibarra and Stone.”
Curiously, the Settlement Agreement does not address what would happen if the property did not settle within the 180-day period within which the Settlement Agreement required the Property to be listed with G&T.
The Stones flatly contend that this necessarily means that because the property did not sell within the 180-day period, all of their obligations to the Ibarras under the Settlement Agreement have been fulfilled, and they have no obligation either to sell the property or to split the net proceeds with the Ibarras in the manner described in ¶ 8.
The Ibarras dispute that the terms of the Settlement Agreement mean that if the property did not sell within the 180-day listing period, that the Stones would have no further obligations to them, including any obligation to sell or split the proceeds, and contend that the Stones’ argument requires the Court to reform the agreement by inserting a term which does not exist and which is inconsistent with the intention of the parties at the time the contract was entered into, i.e. that those obligations—set forth in ¶ 8—would only exist if the party sold “during the listing period” that was set forth in ¶ 1. The Ibarras estimate that doing so would involve them simply agreeing to walk away from more than $100,000 if the property did not sell within the 180-day period, which does not make sense given the scope of the larger disputes that the Settlement Agreement was intended to resolve.
In reviewing the Settlement Agreement as a whole, it does not appear that the Settlement Agreement even appeared to contemplate the possibility that the property might not sell with in the 180-day listing period. It contains no terms regarding what would happen if the property did not sell within that period. It does not contain any terms that would expressly require that the property continue to be marketed and sold after the termination of the 180-day listing period. However, neither does it contain any terms that would expressly or clearly indicate that the 180-day period was the complete and total marketing period contemplated by the parties, and that the Stones would have no further obligations to the Ibarras if it did not sell within that time.
In fact, the wording the Settlement Agreement utilizes makes reasonably apparent to the Court that both the Stones and the Ibarras unquestioningly believed that the property would sell within that 180-day period. Whether this was because of the nature of the real estate market in Santa Barbara at the time the agreement was executed, or for some other reason, it appears from the language of the Settlement Agreement that both the Stones and the Ibarras had complete confidence that the property would sell within the 180-day period.
Certainly, had it been the intent of the parties in settling the contentious litigation that the obligation to sell and split the net proceeds over $1,950,000 only extended through the 180-day listing period, and that all obligations by the Stones under the agreement would terminate if that sale did not occur, the Settlement Agreement could easily have clearly stated as much. It did not.
The conspicuous failure of the Settlement Agreement to address—in any way—what would happen if the property failed to sell within the 180-day listing period, when considered in conjunction with the parol evidence regarding the circumstances surrounding the execution of the Settlement Agreement, including the nature and scope of the multiple disputes it was intended to resolve, creates a triable issue of material fact with respect to the intent of the parties in executing the agreement, with respect to the nature and scope of the sales efforts which would be required and the continuing nature of the obligation to split the net proceeds in excess of $1,950,000.
Of course, the Stones contend that even if the Settlement Agreement is interpreted to mean that their obligation to continue to market the property did not terminate with the expiration of the 180-day listing period, they have complied with that obligation by continuing to market the property. They particularly emphasize that they obtained an all-cash offer of $2,300,000 for the property, which was reduced to $2,200,000 after the prospective buyer viewed the property, and that they have retained Berkshire Hathaway to evaluate the property and make recommendations for its sale.
Assuming (without evaluating or determining) the validity of the purchase offer and the Stones allegedly continuing efforts to market the property, this ignores that the obligation to market and sell the property was not the only obligation for which there is necessarily a triable issue of material fact which arose from the Settlement Agreement’s complete failure to address what would happen to the property should it not sell within the 180-day exclusive listing period. The Stones’ obligations under the Settlement Agreement included not only the market and sale of the property, but also their division with the Ibarras of all net proceeds from the sale over $1,950,000.
The Stones expressly refuted any further obligations under the Settlement Agreement in December 2023, which would necessarily include the obligation to split with the Ibarras any net proceeds over $1,950,000.
This gives rise to several issues which cannot be resolved as a matter of law on undisputed facts, precluding the grant of the motion for summary adjudication. First, it raises triable issues of material fact with respect to whether the Stones have, in fact, complied with all of their obligations under the Settlement Agreement, such that they have any basis in law or fact to contend that the Ibarras are in breach of the agreement by failing to vacate the property. There is competent evidence before the Court that the Ibarras have represented to the Stones that they will vacate the property if the Stones confirm their obligation to divide the net proceeds over $1,950,000 with the Ibarras, and that the Stones have refused.
Second, it raises a triable issue of material fact with respect to whether the Stones could be found to have committed an anticipatory breach of the Settlement Agreement in refuting any further obligations under the agreement, and whether any such anticipatory repudiation would obviate the Ibarras’ obligation to vacate the property under the terms of ¶ 4 of the Settlement Agreement.
The ultimate trier of fact in this case, i.e., the jury, may well find in the Stones favor, and find that the Stones had no further obligations under the Settlement Agreement after the 180-day exclusive listing agreement terminated without a sale of the property, and that the Ibarras are therefore in breach of their obligation to vacate the premises at that time. However, on this motion for summary adjudication, this Court is prohibited from weighing and resolving the triable issues of fact and may only identify that such issues exist which prevent the grant of the motion.
For all of the foregoing reasons, even if the Court ignores the grave defects in the structure of the motion for summary adjudication and considers the facts and evidence which are never set forth in the motion’s Separate Statement, it concludes that the motion both fails to meet its initial burden of persuasion on the issues necessary to its resolution, and that triable issues of material fact exist. Consequently, the Court will deny the motion.
Plaintiff’s evidentiary objections:
Declaration of Thyne. 1. Overruled. 2. Overruled. 3. Sustained as to legal conclusion, otherwise overruled. 4. Sustained as to lack of foundation, otherwise overruled. 5. Sustained to second half of sentence on the basis of unsupported conclusion, otherwise overruled. 6. Overruled. 7. Sustained as to improper conclusion, otherwise overruled. 8. Sustained as to lack of foundation, otherwise overruled. 9. Sustained as to second and third sentences. 10. Overruled. 11. Overruled. 12. Sustained as to lack of foundation, otherwise overruled. 13. Sustained as to second sentence only. 14. Sustained as to legal conclusion only. 15. Overruled. 16. Sustained on legal conclusion basis.
Declaration of Ibarra. 17. Overruled. 18. Overruled. 19. Sustained as to legal conclusion, otherwise overruled. 20. Overruled. 21. Sustained as to lack of personal knowledge. 22. Sustained to second half of the sentence on the basis of unsupported conclusion, otherwise overruled. 23. Sustained as to legal conclusion, otherwise overruled. 24. Overruled. 25. Sustained as to lack of foundation. 26. Sustained on lack of foundation. 27. Sustained on lack of foundation. 28. Sustained on lack of foundation. 29. Sustained on lack of foundation. 30. Sustained only as to third sentence only. 31. Sustained on lack of foundation. 32. Sustained on lack of foundation. 33. Overruled. 34. Sustained as to second sentence only. 35. Sustained as to legal conclusion. 36. Overruled. 37. Sustained on legal conclusion.
Declaration of Carrillo 38. Overruled. 39. Overruled. 40. Sustained as to legal conclusion, otherwise overruled. 41. Overruled. 42. Sustained as to lack of personal knowledge. 43. Sustained to second half of sentence on the basis of unsupported conclusion, otherwise overruled. 44. Sustained as to legal conclusion, otherwise overruled. 45. Overruled. 46. Sustained as to lack of foundation. 47. Sustained as to lack of foundation. 48. Sustained as to lack of foundation. 49. Sustained as to lack of foundation 50. Sustained as to lack of foundation. 51. Sustained as to third sentence only. 52. Sustained as to lack of foundation. 53. Sustained as to lack of foundation. 54. Overruled. 55. Sustained as to second sentence only. 56. Sustained as to legal conclusion. 57. Overruled. 58. Sustained as to legal conclusion.